Competition is Killing Us

What has become clear is that the unwavering focus on shareholder returns and profit is endangering lives, threatening society and compromising the habitability of our planet. Governments struggle to keep up with an economic system designed to devour the world and every resource within it, and it has taken us longer than it should have to face up to the fact that we are living precariously on a finite, crowded and divided planet that is steadily getting warmer.

The costs of free markets and the true power of companies have been completely removed from our analysis exactly where this would be most relevant – in the discipline of antitrust, which is meant to deliver the vaunted benefits of competition to the masses. Antitrust law is supposed to protect competition, promote market fairness and prevent power from accumulating. But power and externalities have been slowly displaced in antitrust thinking, replaced instead by a single-minded focus on low prices for consumers. Economic democracy is equated with the opportunity to spend, and to buy more and more, even whilst the tragic collapse of our ecosystem is unfolding.

What the free market myths are trying to deflect attention from are a few harsh truths. The initial allocation of resources, wealth, skills and talents matter – in fact, they are determinative – and thus should not be ignored. The outcomes of the market are not natural, they are chosen through commission or omission by society and moulded by those whom the market treats most favourably. Corporate conduct is channelled towards whatever scheme will make the most money, and then the next most, and then the next most, with scant regard for planetary, social and moral boundaries – or any other boundary, except the financial. Capital flows to where there is opportunity, and it competes and wins for itself, and there are real people – and not that many of them – who take home the dividends.

Adam Smith’s ‘invisible hand’, which explained that it is not the benevolence but rather the self-interest of the butcher, the brewer and the baker that guides the market to its best, most efficient outcome, is just one part of the story. The invisible hand may optimize, but it does so based on the existing distribution of wealth and resources. This distribution is not random, it is a choice, and it is chosen by another, equally invisible hand.

Externalities can be used as an indicator of power, and vice versa. If a company has market power, there may be externalities that it is able to emit. If we see an industry with large externalities, we may look for sources of power that allow the companies in that industry to continue functioning without a reckoning. The production of externalities itself constitutes a method of unfair competition.⁵ Saving costs or generating ‘efficiencies’ by using ‘free’ natural resources is, in effect, a way of cheating the economic system. Just as prices can be excessive, so too can social costs. On this view, the preservation of the natural commons – our shared environmental and social resources – should become a legal responsibility of all companies throughout corporate regulation. Within antitrust we currently look at the efficiency of resource exploitation when we could instead be looking at the efficiency of resource preservation.